Joan Jett may not give a @*#! about her reputation, but we know two companies that probably should: IBM and Facebook. The two tech giants have made recent news as defending parties in separate lawsuits filed for unrelated, but similar reasons.
IBM faces a class-action suit from a group of former employees who allege wrongful termination on the basis of age discrimination. The plaintiffs accuse the company of “systematically laying off older employees in order to build a younger workforce,” and are just a few of the approximately 20,000 workers over age 40 whom IBM has fired since 2013.
Facebook, meanwhile, has been accused of allowing employers to exclude women from job listings. The American Civil Liberties Union alleges that 10 companies used the social network’s advertising tools to target campaigns exclusively to male candidates. Many of the employment opportunities were in traditionally male-dominated fields such as construction and transportation.
Although these lawsuits likely won’t sink either company (not to mention the fact that Facebook currently has about 1,000 other legal battles to worry about), there’s more than fines, settlements, or attorneys’ fees at stake here. In today’s millennial-driven, socially conscious media environment, potentially discriminatory—or otherwise legally shady—employment practices carry higher costs than ever.
Take a look at what Denise Lee Yohn, author of What Great Brands Do: The Seven Brand-Building Principles that Separate the Best from the Rest, recently wrote in Harvard Business Review:
“Companies are coming under increased scrutiny from media, customers, investors, and other stakeholders for organizational practices that used to be hidden from the public. People now have access to information including companies’ wages and benefits, sexual harassment policies, and involvement in political issues. Plus, social media gives consumers a voice with which to speak out against companies they believe are unfair or irresponsible—and they expect those companies to listen and respond.
Business leaders must recognize that a company’s employment practices can shape brand perceptions just as much as traditional marketing efforts. Public relations firm Weber Shandwick found [PDF] that when consumers discuss companies, the top five topics include how they treat their employees and news about their involvement in scandals or wrongdoings. And Edelman reports that no single action by a company is more interconnected with its ability to build trust with the public than ‘treating employees well.’ So in their pursuit of employees with desirable skills and profiles, companies must be sure they aren’t alienating customers and other stakeholders. After all, does any company really want a reputation as a firm that won’t employ older workers or women?”
You don’t need to run a multibillion-dollar business to imagine how the same kinds of issues could impact your company and brand. Customers and employees are key stakeholders for any organization—and they aren’t very far removed, especially in the current employment market. When the experiences of one group affect the perceptions of the other, you can never afford to think of your reputation as an afterthought.